Revenue forecast errors in Pennsylvania local government budgeting: Sources and remedies

Revenue forecast errors in Pennsylvania local government budgeting: Sources and remedies

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Article ID: iaor19931050
Country: United States
Volume: 4
Start Page Number: 721
End Page Number: 743
Publication Date: Aug 1992
Journal: Public Budgeting and Financial Management
Authors: , ,
Keywords: government, time series & forecasting methods, forecasting: applications, management, planning, economics, programming: nonlinear, financial
Abstract:

A sample of county and city governments in Pennsylvania is used to explore the quality of budget revenue forecasting. Though total revenue forecasts tend to be off by a very substantial 16 to 18%, both counties and cities do well at forecasting local tax revenues and particularly the property tax. Major problems exist, however, in forecasts of local user fees and intergovernmental revenue transfers. Systematic conservative bias exists in all revenue sources except that property tax, which tends to be over estimated. The results suggest that local government officials should focus efforts on forecasting user charges and intergovernmental revenues as well as incorporating additional components into forecasts of the property tax.

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